The effects of the coronavirus pandemic on employment in April were historic, with a record total of 20.5 million jobs lost during the month. The unemployment rate soared to 14.7% during the month, increasing more than 10 percentage points on a year-over-year basis. The joblessness data represent a partial reflection of the 33.5 million jobless claims that have been filed during the past seven weeks, according to NAHB Now.
While the numbers are staggering, it is important to note that they are due to government-imposed public health strategies. For example, there are now 18 million people on temporary furlough. Hopes for a faster rebound in economic activity lay with this number. While NAHB’s forecast is more U-shaped for the overall economy (we see continued economic weakness persisting into the third quarter due to small business issues and elevated unemployment), these temporary layoff totals give a sense of the number of people who believe their job will return as the economy reopens.
Residential construction employment and remodeling declined by 415,000 positions in April. This decline places the industry employment total at 2.54 million, which is near November 2015 levels. Unlike the Great Recession, housing enters this downturn underbuilt, with a housing deficit of approximately 1 million residences. This potential demand means that housing is a sector that can provide economic momentum in a recovery. However, there are limiting factors such as the availability of builder financing. Indeed, banks reported net tightening for commercial real estate lending conditions, as well as declines for demand for such loans.
The Associated General Contractors of America (AGC) reported unemployment among workers with recent construction experience increased by 1.1 million in April on a year-over-year basis to 1.53 million. The industry unemployment rate increased from 4.7% in April 2019 to 16.6% in April 2020, according to the AGC.
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